Have you been paying attention to shares of Brady (BRC - Free Report) ? Shares have been on the move with the stock up 6% over the past month. The stock hit a new 52-week high of $50.55 in the previous session. Brady has gained 13.3% since the start of the year compared to the 21.2% move for the Zacks Industrial Products sector and the 33.4% return for the Zacks Security and Safety Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 23, 2019, Brady reported EPS of $0.65 versus consensus estimate of $0.57 while it missed the consensus revenue estimate by 1.38%.
For the current fiscal year, Brady is expected to post earnings of $2.4 per share on $1.17 billion in revenues. This represents a 17.65% change in EPS on a -0.55% change in revenues. For the next fiscal year, the company is expected to earn $2.51 per share on $1.2 billion in revenues. This represents a year-over-year change of 4.45% and 2.6%, respectively.
Brady may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Brady has a Value Score of B. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 19.2X versus its peer group's average of 12.7X. Additionally, the stock has a PEG ratio of 2.73. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Brady currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Brady fits the bill. Thus, it seems as though Brady shares could have a bit more room to run in the near term.